Please note that this discussion is focused entirely on the U.S. In most of the rest of the world, employment is, in fact, contractual and an employer cannot reduce wages unilaterally. If an employer does so, it would be viewed as constructive dismissal, and the consequences would be spelled out in the contract – commonly, the payment of a large termination benefit. (Quick example: in most of Latin America, you’re talking about a lump sum payment of one to two months’ pay times years of service.)
In the U.S., employment is “at will” unless there is some contractual agreement (like a union agreement) to the contrary. Lawyers will cringe at my oversimplification, but employment at will basically means the employer can do anything he jolly well pleases, so long as it’s not a violation of some other law. For example, you couldn’t be fired on account of race, religion, national origin, ethnicity, gender, etc. You couldn’t fire someone for insubordination if they refuse an order to perform some illegal act. And so forth. In the U.S., there’s a small number of such restrictions on “at will” employment. But otherwise, you can be fired for any or no reason.
The cites provdied by Gfactor are related to the fired employee’s ability to collect unemployment insurance, basically. If a person is fired for cause – for example, stealing from the company – they are not entitled to unemployment insurance. Note
It’s not a reason for the employer to pay any sort of damages, it’s a justified reason for the employee to quit.
So, rest assured, that if your U.S. employer cuts your wages, your recourse is that you can quit.
It would depend on whether the stated policy rises to the level of a contractual obligation. Most such policies are found in some sort of employee manual, and nearly all such manuals contain a big, bold disclaimer on page 1 that states that nothing in the manual creates a contractual obligation.
If the policy does rise to the level of a contractual obligation, then I agree that the employee has a fairly good claim for the benefits.
Oh, and I agree with the last two replies that there are certain limits on an employer’s ability to terminate an at-will employee. These limits vary from state to state, but Dex summarized the main points.
And speaking of disclaimers… Although IAAL, I’m not your lawyer and am probably not licensed in your state. This is general information and not meant to be legal advice. See a lawyer licensed in your state for that.
Here’s the deal. If you are going to sue your employer for wrongful termination, you must prove a few things. Two of the most salient are:
That you were terminated.
That you had a right not to be.
There are more (for instance you must show damages–if your employer fired you and you found a higher-paying job the next day, your damages would be speculative, at best), but for our purposes, these two are the relevant ones.
Normally, if you quit your job, you can’t complain about it. But the courts recognize that in some cases, an employer can make a job so intolerable that the employer was really the cause of the termination, even though the employee quit. Imagine, for example, that your employer cut your salary in half, or took your desk job away and gave you janitorial duties instead. Under those circumstances, a court might find that the employee had been “constructively terminated.”
But that is half the battle. As has already been pointed out, an employer can terminate any employee for any reason or no reason, as long as it is not a bad reason. So even if you were to sue your employer for constructively terminating you, you would probably lose because the employer had a right to do so.
Employers do this all the time. When I worked at a self-serve gas station, the company used to get rid of assistant managers that had fallen out of favor by transferring them to a station that was 40 miles from their home station. With the same pay, they couldn’t afford the transfer and quit. I have seen the same happen to lawyers at small firms.
Bottom line: You can’t sue unless you could have sued had they fired you under the same circumstances. For example, you are 45 and they wanted to hire a younger employee, you are two years into a three year contract, you notified the authorities of a crime that your employer committed.